Why Is Radius Health (RDUS) Down 11.6% Since Last Earnings Report?

A month has gone by since the last earnings report for Radius Health (RDUS). Shares have lost about 11.6% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Radius Health due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Radius' Q1 Earnings Miss Estimates, Sales Surpass

The company incurred a loss of 81 cents per share in the first quarter, wider than the Zacks Consensus Estimate of a loss of 72 cents. Nevertheless, the loss was narrower than the year-ago quarter’s loss of 94 cents owing to increased revenues.

The company reported revenues of $47.9 million, surpassing the Zacks Consensus Estimate of $47 million. The figure increased from the year-ago quarter’s $29.8 million.

Quarter in Detail

We remind investors that Radius obtained the FDA approval for Tymlos (abaloparatide) injection in April 2017 for the treatment of postmenopausal women with osteoporosis at high risk of fracture. The company commenced shipments of the drug to wholesalers toward the end of May 2017.

Tymlos sales of $47.9 million in the United States were up 61% year over year.

By the end of the first quarter, the drug captured, on average, 44% of the U.S. anabolic osteoporosis market (based on Patient Months on Therapy, TRx PMOT) and achieved a 53% share of new anabolic patient starts.

There has been a decline in new patient starts in April due to the decrease in physician office visits resulting from government restrictions in response to the pandemic.

Research & development expenses for the reported quarter were $39.0 million, flaring up 68% year over year primarily due to a rise in elacestrant project and abaloparatide-patch project costs. General & administrative expenses decreased 12% to $36.4 million.

Pipeline Updates

The company’s pipeline includes abaloparatide injection for potential use in the treatment of men with osteoporosis, abaloparatide patch for potential use in osteoporosis and elacestrant (RAD1901) for potential use in hormone receptor-positive breast cancer.

Enrollment in the phase III study, ATOM, which is assessing the efficacy and safety of abaloparatide-SC in men with osteoporosis, is 90% complete. Radius expects to complete recruitment later in the year and report top-line data in the second half of 2021.

The Tymlos bone histomorphometry study, which evaluated the early effects of abaloparatide-SC on tissue-based indices of bone formation and resorption in postmenopausal women, met its primary endpoint of change from baseline to 3 months in the mineralizing surface of the cancellous bone envelope, which is a strong indicator of bone formation.

In August 2019, the first patient was randomized in the phase III wearABLe clinical trial, assessing the safety and efficacy of abaloparatide-patch in postmenopausal patients with osteoporosis at high risk for fracture. The study is currently enrolling. The screening failure rate has significantly decreased after the implementation of a revised enrollment plan and the addition of targeted bone specialty sites in the United States. In Europe, regulatory reviews are underway, with first conditional approvals already received for sites to be initiated in the second quarter of this year. Top-line data from the study are expected in the second half of 2021.

2020 Guidance Lowered

Radius now expects Tymlos net revenues of $190-$220 million, down from the earlier projected range of $220-$235 million.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended downward during the past month. The consensus estimate has shifted -13.93% due to these changes.

VGM Scores

Currently, Radius Health has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. Notably, Radius Health has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

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